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The 36-square-metre flat contained just three rooms – a bedroom, a kitchen and a bathroom. Catseye Bay director Sarah Jamieson was charged with reworking these spaces, making room for living and dining areas.

Her first move was to design a series of wooden insertions that create informal space dividers, but that also take the place of space-hungry furniture items such as wardrobes and bookshelves.

"Understanding in detail how you live in and use a space is always important," explained Jamieson. "It becomes critical when designing a tiny space like this, where everything is happening on top of itself."

"It's important to work out how to separate functions where necessary, or layer them, and make the experience of being in the space more nuanced, and delightful," she added.

The largest of the additions is an approximately two-metre-high wooden structure that projects out diagonally from one of the bedroom walls.

On one side, it contains storage for the occupant's clothing and shoes, creating a small dressing area. But the other side integrates shelves, flanking a bed that is invisible when entering the room.

The bed is shorter than the wooden unit, leaving space in front for an upholstered seating bench that can be softened by the addition of cushions. In this way, the space can function as both lounge and bedroom.

Both the bed and the bench face the window, which integrates another new joinery element – an extended sill that creates a small desk.

Similarly, the kitchen features a new shelving unit and worktop that extends out to create a counter for dining on.

Both this element and the big partition structure are constructed from birch plywood, hand-finished to create a simple and well-crafted aesthetic.

They also integrate curves, intended to reference the Art Deco exterior of the building, which is sits among a series of 1930s blocks in Sydney's Darlinghurst suburb.

Many of the flat's original details are preserved and celebrated, including pine floorboards, cornices and lighting. Other additions include large plant pots and artworks.

"Avoiding the 'what you see at first is all there is' syndrome common to one-room apartments, this studio now functions as a one bedroom living space, revealing its delights and small moments slowly, over time," said Jamieson's team.

The apartment will be rented out to short-term visitors, using a similar service to Airbnb. This type of service is proving increasingly popular among property owners, and has resulted in several impressive renovations.